Retailers Decry Hidden Credit Card Fees
Merchants and retailers across the U.S. have expressed their anger over a policy practiced by virtually all card companies. According to representatives of small retailers across the nation, card issuers have been charging them millions of dollars worth of hidden fees and charges for several years. Typically, when a customer pays using credit cards, the card companies charge retailers up to four percent of the amount. Most cards charge two percent while premium credit cards can charge up to twice that rate.
Retailers say that with more and more American consumers opting for plastic over cash, they can stand to lose millions of dollars each year. To help offset the lost revenues, merchants often pass on the fees to their customers. As a result, customers have to pay more than what they have to shell out when using cash. This has led to many retailers crying foul and blaming the card companies for the hidden charges.
According to the National Retail Foundation, American households are paying up to $427 each year for the transaction fees. Retailers, on the other hand, point out that they shoulder the hefty fees, which can amount to millions of dollars each year. With the prevalence of plastic among shoppers, however, most merchants are forced to pass on the charges and fees to their customers. Retailers say that while they do not wish to resort to passing on the expenses to consumers, they are often left with no choice.
Some prominent retailers are taking the issue to Congress, with many merchants demanding that they be given negotiating powers when it comes to transaction fees. In fact, retailers have also started a signature campaign to deliver 750,000 signatures to Congress this coming week in an effort to convince lawmakers to review the industry practice.
Card companies, for their defense, point out that there are certain costs to dealing with credit. They explain that there is a need to charge retailers a small fee whenever customers use credit cards to pay. However, they add, merchants must not pass on their obligations to consumers. Card issuers argue that by giving retailers substantial power over transaction fees, Congress can unknowingly empower merchants with the ability to pass on any expenses directly to their customers.
Some card companies, on the other hand, are saying that retailers and merchants can choose among the many electronic payment systems. They explain that retailers can actually choose the payment systems that they see as more affordable and suitable for their needs.
